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Class A Apartments?
by David Stanowski and Jacquelyn Tarpy
25 October 2011

The GOGP has completed the demographic analysis of all 61 census tracts in Galveston County, so it is clear that the locations where the GHA wants to rebuild Public Housing, on the footprints of Magnolia Homes, Cedar Terrace, and possibly Oleander Homes, are some of the worst census tracts in the County! In fact, they admitted to the City Council that HUD designated them as "impacted' census tracts.

However, the GHA believes that by building mixed-income developments in these locations, they can ignore the unacceptable demographics, and the fact that they are in low-opportunity neighborhoods. If they eventually sign a deal with their selected master developer, they not only want to build mixed-income, they want it to be Class A mixed-income developments where the apartments may cost as much as a quarter of a million dollars each to build! Sounds very impressive, so far.

The GHA goes on to say that there are no Class A apartments on the Island, so there is a great deal of pent-up demand for them. However, in order to make these projects work, 40% of the units must be rented by middle class "doctors, lawyers, and engineers". Without the high rent that they will pay, there will not be sufficient cash flow to be profitable, and the community will lose the social stability that market-rate tenants are supposed to add to the mix of Public Housing and tax-credit tenants.

To see how this mixed-income scheme will work, we need to understand 
the definition of Class A apartments.

This is a sampling of definitions available on the Internet:

"Class A properties are luxury units. They are usually less than 10 years old and are often new, upscale apartment buildings. Average rents are high, and they are generally located in desirable geographic areas. White-collar workers live in them and are usually renters by choice."

"Class A: These types of facilities are large apartment complexes in the most favorable locations featuring many amenities."

"Class A being newer properties with the best amenities and location"

"Class A properties—so called because they’re relatively new and located in the most desirable areas"

"Class A Apartments - Institutional buyers like new, larger apartments in prime locations because of low deferred maintenance. These properties are typically occupied by white collar workers and have amenities such as garages, in-unit washer/dryers, pools, spas, exercise gyms, the latest technology, etc. They are typically between 1-10 years old. Typically they are in the path of progress"
Apartment Building Classifications

It seems pretty clear that Class A apartments are new, have upscale amenities, and are in the most desirable locations. The GHA mixed-income plan seems to meet the first two conditions, but we are confused about the last one. We now know that the Cedar Terrace site is the worst census tract in the County, so how could it qualify as "one of the most desirable locations" in the City. When we visited the site, this is what we found:

Looking west from the property, this is where the tenants would view sunsets in this new community. The chain link fence topped with barbed wire adds a nice touch to the aging water tanks. Many would prefer the sweeping panorama over Offatts Bayou, but to each his own. 

Cedar Terrace West

The western perspective from the property
also includes the "picturesque" Falstaff Brewery.

Falstaff Brewery

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Looking north from the property, the tenants would have an unobstructed view of the Park Board equipment yard. Most upscale neighborhoods are unable to include industrial facilities on two sides of the property, so this will be a rare location for Class A apartments.

Cedar Terrace North

Most of the new tenants may prefer the view to the east from the new mixed-income development, because it provides a broad panorama of the "affluent" residential enclave that adjoins the property. We are told that the low building, to the lower right, served as the local night club in the heyday of Cedar Terrace, so the new mixed-income development on this site will surely revive it to its former glory.

Cedar Terrace East

Close up of the night club.

Night Club

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The Southern view features a nice row of houses and a church at the far right. One out of four is better than nothing.

Cedar Terrace South

All of our research clearly shows that housing authorities are no longer allowed to build Public Housing projects in these kinds of outrageously bad neighborhoods, so we can't see how building on this site can possibly qualify as a Class A development, but we know nothing about multi-family real estate development, so we have sent this information to the Galveston County Apartment Association to see what they can make of it, and we would welcome comments from other developers and owners of rental property. We are very confused!


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